While Bitcoin continues to be the most widely used cryptocurrency for online payments, Ethereum is a different platform and payment system using the same technology. Both use blockchain technology, with Ethereum allowing permissioned and permissionless transactions.
To enable smart contracts and cryptocurrency trading, Ethereum is an open-source service that uses blockchain technology. The Ethereum network secures transactions without the involvement of a third party enable developers to launch a variety of decentralized applications.
With smart contracts and Dapp (Decentralized applications)options that expand blockchain possibilities, Ethereum technology inspires the developer community. Even though Bitcoin is still the most widely used cryptocurrency, many people are speculating that Ethereum will soon overtake Bitcoin in terms of usage due to its functionalities.
Let’s look at a brief history of Ethereum, why it is unique, and how it differs from Bitcoin.
History of Ethereum
Vitalik Buterin, the co-founder of Ethereum, used blockchain technology after Bitcoin’s launch and became interested in its services at the age of 17. Vitalik Buterin, after studying how Bitcoin functions, thought there was a need to introduce another payment technology with a different approach. He published a white paper in 2013 outlining his idea for a platform that went beyond the financial use cases that the Bitcoin network was allowed to support.
The platform’s ability to trade more than just cryptocurrencies was its primary advantage over Bitcoin. This was made a reality in 2014 after Buterin and the other Ethereum co-founders launched a crowd-sourcing campaign in which they raised more than $18 million by selling participants Ether (Ethereum tokens) to fund their vision. After a preliminary fundraising drive, Ethereum was launched in 2015, with 72 million coins minted. These original coins were distributed to the people who provided the initial funding for the project, and as of April 2020, they still account for about 65% of all coins in the system.
However, in 2015, the first live release of Ethereum, known as Frontier, was launched, envisioned to be the solution for all use cases of blockchain that do not have a specialized system to turn to. Although there have been fluctuations in the price of ether (the Ethereum coin), its value keeps improving in the market.
Why is Ethereum so unique?
Its native currency, ether (ETH), is the second-largest cryptocurrency after bitcoin (BTC), making Ethereum one of the largest blockchains in existence.
Ethereum is special for several reasons, even though it was created to perform better in situations where Bitcoin might fall short. First, Ethereum has a broader reach than just its network and is the best for staking, DeFi, and investing. Ethereum enables users to verify secure, transparent, and democratic transactions thanks to its solid blockchain foundation. The ultimate goal of its creators is to make it a superior Bitcoin substitute.
- On the Ethereum blockchain, every transaction is unchangeable.
- Smart contracts run on their own, so there is no requirement for a trusted intermediary to carry out the actions to determine the validity of a transaction. Due to the lack of third-party fees, it is also frequently less expensive.
- No possibility of downtime, censorship, fraud, or outside interference for applications created on the Ethereum platform; they operate as intended.
How is Ethereum different from Bitcoin?
After Bitcoin, Ethereum is next on the list of top digital assets by market cap. Except for Bitcoin, it is the most prevalent asset on all cryptocurrency exchanges. There are many similarities and differences between Ethereum and Bitcoin, even though both of these cryptocurrencies use blockchain technology.
- The first computer to solve a new block is given a Bitcoin (or a portion thereof). Instead of providing block rewards, Ethereum lets miners charge a transaction fee.
- Bitcoin deals in digital currency, whereas Ethereum offers several exchange options, including digital currency.
- In contrast to Bitcoin’s “proof of work” system, Ethereum uses a “proof of stake” system.
- Unlike Ethereum, which supports both permissioned and permissionless transactions, Bitcoin only permits public (permissionless or censor-proof) transactions.
- All blockchain transactions are cryptographically secured, and Ethereum has three times as many nodes as Bitcoin for transaction verification.
The fact that Ethereum is more than just a virtual currency is one of the first things to realize about it. The Ethereum Virtual Machine (EVM), smart contracts, and ether are just a few of the features included in the blockchain-based platform.
A peer-to-peer network for securely executing and verifying application code, or “smart contracts,” is created by Ethereum, a decentralized blockchain technology platform. Participants can negotiate with one another using smart contracts without the aid of a reliable central authority.
With a peak market cap of almost $140 billion and an all-time high price of $1400 per ETH, Ethereum cemented its top spot on the list of cryptocurrencies. Ethereum accounts for roughly 10% of the current market capitalization of all cryptocurrencies.